Amended in Assembly April 22, 2014

Amended in Assembly March 28, 2014

California Legislature—2013–14 Regular Session

Assembly Bill No. 2533

Introduced by Assembly Member Ammiano

February 21, 2014

An act to add begin delete Sections end delete begin insert Section end insert 1367.031 begin delete and 1374.37 end delete to the Health and Safety Code, and to begin insert amend Section 10133.5 of, and to end insert add begin delete Sections end delete begin insert Section end insert 10133.51 begin delete and 10169.6 end delete to begin insert , end insert the Insurance Code, relating to health care coverage.

LEGISLATIVE COUNSEL’S DIGEST

AB 2533, as amended, Ammiano. Health care coverage: noncontracting providers.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law also provides for the regulation of health insurers by the Department of Insurance. Existing law requires the Department of Managed Care and the Insurance Commissioner to adopt regulations to ensure that enrollee’s and insureds have access to needed health care services in a timely manner, as specified. Existing law authorizes the Department of Managed Care to assess administrative penalties for noncompliance with the requirements, which are paid into the Managed Care Administrative Fines and Penalties Fund.

begin insert

This bill would require the Department of Insurance, in developing the regulations, to develop indicators of timeliness of access to care considering specified indicators of timeliness of access to care, including waiting time for appointments with physicians. The bill would require contracts between health insurers that contract with providers for alternative rates and health care providers to assure compliance with the developed standards. The bill would authorize the Insurance Commissioner to investigate and take enforcement action against health insurers regarding noncompliance with the requirements of these provisions, including assessing administrative penalties that would be paid to the Health Insurance Administrative Fines and Penalties Account in the Insurance Fund, which the bill would establish.

end insert

This bill would require a health care service plan or health insurer to arrange for the provision of a medically necessary service by a licensed noncontracting provider if the plan or insurer is unable to meet timely access standards established by the Department of Managed Care or the Insurance Commissioner. The bill would require the noncontracting provider to seek reimbursement for the covered service solely from the health care service plan or health insurer, except for allowable copayments, coinsurance, and deductibles. The bill would authorize the Director of Managed Care and the Insurance Commissioner to assess administrative penalties begin insert of a minimum end insert of $1,000 per violation against a health care service plan or health insurer that fails to comply with these requirements. The bill would require that the penalties assessed against health care service plans be deposited into the Managed Care Administrative Fines and Penalties Fund. The bill would begin delete establish the Health Insurance Administrative Fines and Penalties Account in the Insurance Fund and would end delete require penalties assessed against health insurers to be deposited into begin delete that account end delete begin insert the Health Insurance Administrative Fines and Penalties Account, end insert to be used, upon appropriation by the Legislature, to support the Department of Insurance.

begin delete

Existing law establishes independent medical review (IMR) systems to provide enrollees and insureds with the opportunity to seek an IMR whenever health care services have been denied, modified, or delayed by a health care service plan or health insurer, or by one of its contracting providers, if the decision was based in whole or in part on a finding that the proposed health care services are not medically necessary.

end delete begin delete

This bill would require a health care service plan contract or health insurance policy issued, amended, renewed, or delivered on or after January 1, 2015, to provide an enrollee or insured with the opportunity to seek an IMR to examine the health insurer’s coverage decisions regarding services not offered by the health care service plan contract or health insurance policy and provided by noncontracting providers. If a determination is made that the health care service plan or health insurer shall cover the service rendered by the noncontracting provider, the bill would require the noncontracting provider to seek reimbursement for the covered service solely from the health care service plan or health insurer, except for allowable copayments, coinsurance, and deductibles.

end delete

Because a willful violation of these requirements with respect to health care service plans would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: yes.

The people of the State of California do enact as follows:

SECTION 1.  

Section 1367.031 is added to the Health and
Safety Code, immediately following Section 1367.03, to read:

1367.031.  

(a) If a health care service plan is unable to meet
timely access standards established pursuant to Section 1367.03,
and is thereby unable to ensure timely access by an enrollee to a
medically necessary covered service provided by a contracted
provider, the health care service plan shall arrange for the provision
of the service by a licensed noncontracting provider in the area of
practice appropriate to treat the enrollee’s condition.

begin insert

(1) A health care service plan shall not impose copayments,
coinsurance, or deductibles for a noncontracting provider that
exceed those of contracting providers.

end insert begin delete

(1)

end delete

begin insert (2) end insert  A noncontracting provider providing a service to an enrollee
pursuant to subdivision (a) shall seek reimbursement for a covered
service solely from an enrollee’s health care service plan, and shall
not seek payment from the enrollee for the covered service, except
for allowable copayments, coinsurance, and deductibles.

begin delete

(2)

end delete

begin insert (3) end insert  A health care service plan referring an enrollee to a
noncontracting provider shall ensure that the location of the
facilities of the noncontracting provider is within reasonable
proximity of the business or personal residence of the enrollee,
and that the hours of operation and provision for after-hours care
is reasonable so as not to result in barriers to accessibility.

begin delete

(3)

end delete

begin insert (4) end insert  The health care service plan shall consider referral to a
specific noncontracting provider preferred by the enrollee. If the
health care service plan does not refer the enrollee to the enrollee’s
preferred noncontracting provider, the health care service plan
shall provide the enrollee with a written explanation outlining the
reasons why the enrollee’s preferred noncontracting provider was
not selected to provide the covered service.

begin delete

(4)

end delete

begin insert (5) end insert  If an enrollee prefers to wait for a contracted provider to
provide the covered service, the health care service plan shall
accommodate the enrollee’s preference.

begin insert

(b) Pursuant to subdivision (f) of Section 1367.03, a health care
service plan shall report annually to the department on any and
all occurrences of denial of care and on compliance with the
requirements of this section. The department shall make this
information public on the department’s Internet Web site.

end insert begin delete

(b)

end delete

begin insert (c) end insert   begin insert (1) end insert begin insert   end insert Pursuant to subdivision (g) of Section 1367.03, the
department may assess an administrative penalty begin insert of a minimum end insert of
one thousand dollars ($1,000) per violation against any health care
service plan that fails to comply with this section.

begin insert

(2) The administrative penalties available to the department
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies as determined by the director for purposes
of enforcing this chapter.

end insert

begin delete

SEC. 2.  

Section 1374.37 is added to the Health and Safety
Code, immediately following Section 1374.36, to read:

1374.37.  

(a) Every health care service plan contract that is
issued, amended, renewed, or delivered on or after January 1, 2015,
shall provide an enrollee with an opportunity to seek an
independent medical review under the process established pursuant
to this article to examine the plan’s coverage decisions regarding
services not covered by the health care service plan contract and
provided by noncontracting providers.

(b) If a health care service plan modifies, delays, or denies a
claim for a service rendered by a noncontracting provider because
the provision of the service is excluded as a covered benefit, the
enrollee may appeal the modification, delay, or denial by
submitting a written statement from the enrollee’s attending
physician, who shall be a licensed, board-certified, or board-eligible
physician qualified to practice in the area of practice appropriate
to treat the enrollee for the health care service sought, certifying
that the service provided by the noncontracting provider is
medically necessary.

(c) Claims for services rendered by a noncontracting provider
that are modified, delayed, or denied because the service is
excluded as a covered benefit shall qualify for the independent
medical review process established pursuant to this article if the
enrollee’s physician, as specified in subdivision (b), certifies the
service is medically necessary.

(d) If a health care service plan modifies, delays, or denies a
claim for a service rendered by a noncontracting provider because
the health care service plan offers an alternative service that is
included as a covered benefit and provided by a contracting
provider, the enrollee of the health care service plan may appeal
the modification, delay, or denial of the claim by submitting both
of the following:

(1) A written statement from the enrollee’s attending physician,
who shall be a licensed, board-certified, or board-eligible physician
qualified to practice in the specialty area of practice appropriate
to treat the enrollee for the health service sought, that the service
provided by the noncontracting provider is materially different
from a health care service the health care service plan approved
to treat the enrollee.

(2) Two documents from the available medical and scientific
evidence that the service provided by the noncontracting provider
is likely to be more beneficial to the enrollee than the alternate
service recommended by the health care service plan.

(e) An external appeal agent shall review the health care service
plan’s coverage decision to modify, delay, or deny claims for
services described in subdivision (a), and shall make a
determination within seven days of receipt of the appeal as to
whether the claim for the service rendered by a noncontracting
provider shall be covered by the plan. The external appeal agent
shall make a determination within 48 hours in cases where an
enrollee has an imminent need for the services in question.

(f) If a determination is made by the external appeal agent that
the service rendered by the noncontracting provider is materially
different from, and more beneficial than, the alternate service
recommended by the plan, the health care service plan shall cover
the service rendered by the noncontracting provider.

(g) The noncontracting provider providing a service to an
enrollee that is required to be covered by the health care service
plan as a result of an independent medical review pursuant to this
section shall seek reimbursement for the service solely from the
enrollee’s health care service plan, and shall not seek payment
from the enrollee for the covered service, except for allowable
copayments, coinsurance, and deductibles.

end delete

begin insert

begin insert SEC. 2. end insert   

end insert

begin insert Section 10133.5 of the end insert begin insert Insurance Code end insert begin insert is amended to
read: end insert

10133.5.  

(a) The commissioner shall, on or before January 1,
begin delete 2004, end delete begin insert 2016, end insert promulgate regulations applicable to health insurers
begin delete which end delete begin insert that end insert contract with providers for alternative rates pursuant
to Section 10133 to ensure that insureds have the opportunity to
access needed health care services in a timely manner.

(b) These regulations shall be designed to assure accessibility
of provider services in a timely manner to individuals comprising
the insured or contracted group, pursuant to benefits covered under
the policy or contract. begin delete The regulations shall insure: end delete begin insert end insert begin insert In developing
these regulations, the department shall develop indicators of
timeliness of access to care and, in so doing, shall consider the
following as indicators of timeliness of access to care: end insert

begin insert

(1) Waiting times for appointments with physicians, including
primary care and specialty physicians.

end insert begin insert

(2) Timeliness of care in an episode of illness, including the
timeliness of referrals and obtaining other services, if needed.

end insert begin insert

(3) Waiting time to speak to a physician, registered nurse, or
other qualified health professional acting within his or her scope
of practice who is trained to screen or triage an enrollee who may
need care.

end insert begin delete

1.

end delete

begin insert (4) end insert begin insert   end insert Adequacy of number and locations of institutional facilities begin insert ,
including hospitals, end insert and professional providers, and consultants
in relationship to the size and location of the insured group and
that the services offered are available at reasonable times. begin insert The
department shall consider the nature of physician practices,
including individual and group practices, and the nature of the
provider network. The department shall also consider various
circumstances affecting the delivery of care, including urgent care,
care provided on the same day, and requests for specific providers. end insert

begin delete

2.

end delete

begin insert (5) end insert begin insert   end insert Adequacy of number of professional providers, and license
classifications of begin delete such end delete begin insert the end insert providers, in relationship to the projected
demands for services covered under the group policy or plan. The
department shall consider the nature of the specialty in determining
the adequacy of professional providers. begin insert The department shall
consider the availability of primary care physicians, specialty
physicians, hospital care, and other health care. end insert

begin delete

3.

end delete

begin insert (6) end insert begin insert   end insert The policy or contract is not inconsistent with standards of
good health care and clinically appropriate care.

begin delete

4.

end delete

begin insert (7) end insert  All contracts including contracts with providers, and other
persons furnishing services, or facilities shall be fair and
reasonable.

begin insert

(c) In developing these standards for timeliness of access, the
department shall consider all of the following:

end insert begin insert

(1) Clinical appropriateness.

end insert begin insert

(2) The nature of the specialty.

end insert begin insert

(3) The urgency of care.

end insert begin insert

(d) The department may adopt standards other than the time
elapsed between an enrollee seeking health care and obtaining
care. If the department adopts an alternative standard, it shall
demonstrate why that standard is more appropriate. In developing
standards pursuant to this subdivision, the department shall
consider the nature of the provider network.

end insert begin delete

(c)

end delete

begin insert (e) end insert  In developing standards under subdivision (a), the department
shall also consider requirements under federal law; requirements
under other state programs and law, including utilization review;
and standards adopted by other states, national accrediting
organizations and professional associations. The department shall
further consider the accessability to provider services in rural areas begin insert ,
specifically those end insert begin insert areas in which health facilities are more than
30 miles apart end insert .

begin delete

(d)

end delete

begin insert (f) end insert  In designing the regulations the commissioner shall consider
the regulations in Title 28, of the California begin delete Administrative end delete Code
of Regulations, commencing with Section 1300.67.2, begin delete which end delete begin insert that end insert
are applicable to Knox-Keene plans, and all other relevant
guidelines in an effort to accomplish maximum begin delete accessibility within
a cost efficient system of indemnification end delete begin insert accessibility end insert . The
department shall consult with the Department of Managed Health
Care concerning regulations developed by that department pursuant
to Section 1367.03 of the Health and Safety Code and shall seek
public input from a wide range of interested parties.

begin insert

(g) (1) Contracts between health insurers that contract with
providers for alternative rates and health care providers shall
assure compliance with the standards developed under this section.
These contracts shall require reporting by health care providers
to health insurers that contract with providers for alternative rates
and by health insurers that contract with providers for alternative
rates to the department to ensure compliance with the standards.

end insert begin delete

(e)

end delete

begin insert (2) end insert  Health insurers that contract for alternative rates of payment
with providers shall report annually begin insert on the number of occurrences
of denial of care and end insert on complaints received by the insurer
regarding timely access to care. The department shall review these
complaints and any complaints received by the department
regarding timeliness of care and shall make public this information
begin insert on the department’s Internet Web site end insert .

begin delete

(f) The department shall report to the Assembly Committee on
Health and the Senate Committee on Insurance of the Legislature
on March 1, 2003, and on March 1, 2004, regarding the progress
towards the implementation of this section.

end delete begin delete

(g)

end delete

begin insert (h) end insert  Every three years, the commissioner shall review the latest
version of the regulations adopted pursuant to subdivision (a) and
shall determine if the regulations should be updated to further the
intent of this section.

begin insert

(i) (1) The commissioner may investigate and take enforcement
action against plans regarding noncompliance with the
requirements of this section. When substantial harm to an insured
has occurred as a result of plan noncompliance, the commissioner
may, by order, assess administrative penalties subject to
appropriate notice of, and the opportunity for, a hearing in
accordance with Chapter 5 (commencing with Section 11500) of
Part 1 of Division 3 of Title 2 of the Government Code. The health
insurer may provide to the commissioner, and the commissioner
may consider, information regarding the health insurer’s overall
compliance with the requirements of this section.

end insert begin insert

(2) The administrative penalties available to the commissioner
pursuant to this section are not exclusive, and may be sought and
employed in any combination with civil, criminal, and other
administrative remedies as determined by the commissioner for
purposes of enforcing this chapter.

end insert begin insert

(3) The administrative penalties shall be paid to the Health
Insurance Administrative Fines and Penalties Account in the
Insurance Fund.

end insert begin insert

(j) There is hereby created the Health Insurance Administrative
Fines and Penalties Account in the Insurance Fund established
pursuant to Section 12975.7. All moneys in the account shall be
subject to annual appropriation each fiscal year for the support
of the Department of Insurance.

end insert

SEC. 3.  

Section 10133.51 is added to the Insurance Code, immediately following Section 10133.5, to read:

10133.51.  

(a) If a health insurer that contracts with providers
for alternative rates pursuant to Section 10133 is unable to meet
timely access standards established pursuant to Section 10133.5,
and is thereby unable to ensure timely access by an insured to a
medically necessary covered service provided by a contracted
provider, the health insurer shall arrange for the provision of the
service by a licensed noncontracting provider in the area of practice
appropriate to treat the insured’s condition.

begin insert

(1) A health insurer shall not impose copayments, coinsurance,
or deductibles for a noncontracting provider that exceed those of
contracting providers in the event that an insured receives services
from a noncontracting provider because a health insurer was
unable to ensure timely access to a medically necessary, covered
service by a contracted provider.

end insert begin delete

(1)

end delete

begin insert (2) end insert  A noncontracting provider providing a service to an insured
pursuant to subdivision (a) shall seek reimbursement for the
covered service solely from the insured’s health insurer, and shall
not seek payment from the insured for the covered service, except
for allowable copayments, coinsurance, and deductibles.

begin delete

(2)

end delete

begin insert (3) end insert  A health insurer referring an insured to a noncontracting
provider shall ensure that the location of the facilities of the
noncontracting provider is within reasonable proximity of the
business or personal residence of the insured, and that the hours
of operation and provision for after-hours care is reasonable so as
not to result in barriers to accessibility.

begin delete

(3)

end delete

begin insert (4) end insert  The health insurer shall consider referral to a specific
noncontracting provider preferred by the insured. If the health
insurer does not refer the insured to the insured’s preferred
noncontracting provider, the health insurer shall provide the insured
with a written explanation outlining the reasons why the insured’s
preferred noncontracting provider was not selected to provide the
covered service.

begin delete

(4)

end delete

begin insert (5) end insert  If an insured prefers to wait for a contracted provider to
provide the covered service, the health insurer shall accommodate
the insured’s preference.

(b) (1) The commissioner may investigate and take enforcement
action against health insurers regarding noncompliance with the
requirements of this section.

(2) The commissioner may, by order, assess an administrative
penalty begin insert of a minimum end insert of one thousand dollars ($1,000) per
violation against a health insurer that fails to comply with this
section, subject to appropriate notice and the opportunity for a
hearing in accordance with Chapter 5 (commencing with Section
11500) of Part 1 of Division 3 of Title 2 of the Government Code.
The health insurer may provide to the commissioner, and the
commissioner may consider, information regarding the health
insurer’s overall compliance with the requirements of this section.
The administrative penalties shall not be deemed an exclusive
remedy available to the commissioner.

begin delete

(3) There is hereby created the Health Insurance Administrative
Fines and Penalties Account in the Insurance Fund established
pursuant to Section 12975.7. All moneys in the account shall be
subject to annual appropriation each fiscal year for the support of
the Department of Insurance.

end delete

begin delete

SEC. 4.  

Section 10169.6 is added to the Insurance Code, immediately following Section 10169.5, to read:

10169.6.  

(a) Every health insurance policy that is issued,
amended, renewed, or delivered on or after January 1, 2015, shall
provide an insured with an opportunity to seek an independent
medical review under the process established pursuant to this article
to examine the health insurer’s coverage decisions regarding
services not covered by the health insurance policy and provided
by noncontracting providers.

(b) If a health insurer modifies, delays, or denies a claim for a
service rendered by a noncontracting provider because the
provision of the service is excluded as a covered benefit, the
insured may appeal the modification, delay, or denial by submitting
a written statement from the insured’s attending physician, who
shall be a licensed, board-certified, or board-eligible physician
qualified to practice in the area of practice appropriate to treat the
insured for the health care service sought, certifying that the service
provided by the noncontracting provider is medically necessary.

(c) Claims for services rendered by a noncontracting provider
that are modified, delayed, or denied because the service is
excluded as a covered benefit shall qualify for the independent
medical review process established pursuant to this article if the
insured’s physician, as specified in subdivision (b), certifies the
service is medically necessary.

(d) If a health insurer modifies, delays, or denies a claim for a
service rendered by a noncontracting provider because the health
insurer offers an alternative service that is included as a covered
benefit and provided by a contracting provider, the insured of the
health insurance policy may appeal by the modification, delay, or
denial of the claim by submitting both of the following:

(1) A written statement from the insured’s attending physician,
who shall be a licensed, board-certified, or board-eligible physician
qualified to practice in the specialty area of practice appropriate
to treat the insured for the health service sought, that the service
provided by the noncontracting provider is materially different
from a health care service the health insurer approved to treat the
insured.

(2) Two documents from the available medical and scientific
evidence that the service provided by the noncontracting provider
is likely to be more beneficial to the insured than the alternate
service recommended by the health insurer.

(e) An external appeal agent shall review the health insurer’s
coverage decision to modify, delay, or deny claims for services
described in subdivision (a), and shall make a determination within
seven days of receipt of the appeal as to whether the claim for the
service rendered by a noncontracting provider shall be covered by
the health insurer. The external appeal agent shall make a
determination within 48 hours in cases where an insured has an
imminent need for the services in question.

(f) If a determination is made by the external appeal agent that
the service rendered by the noncontracting provider is materially
different from, and more beneficial than, the alternate service
recommended by the health insurer, the health insurer shall cover
the service rendered by the noncontracting provider.

(g) The noncontracting provider providing a service to an
insured that is required to be covered by the health insurer as a
result of an independent medical review pursuant to this section
shall seek reimbursement for the service solely from the insured’s
health care service plan, and shall not seek payment from the
insured for the covered service, except for allowable copayments,
coinsurance, and deductibles.

end delete

begin delete SEC. 5. end delete
begin insert SEC. 4. end insert   

No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district are the result of a program for which legislative authority
was requested by that local agency or school district, within the
meaning of Section 17556 of the Government Code and Section
6 of Article XIII B of the California Constitution.